Benefits and pensions rise as two-child cap ends
Benefits and Pensions Rise as Two-Child Cap Ends
Major Adjustments to Social Support
As the new fiscal year begins, several welfare benefits and the state pension are undergoing increases. Notably, families with more than two children will now receive higher support under universal credit. The previous two-child benefit cap has been removed, resulting in an average annual boost of £4,100 for approximately 480,000 households with three or more children.
Impact on Families and Public Reaction
Tracey Morris, a mother of five from Huddersfield, shared how the change has eased her financial burden. “This rise is a massive help in managing the rising cost of living,” she said, adding that she relies on local food pantries like The Bread and Butter Thing to afford essentials. Despite working full-time for her council and taking on extra shifts at a pub, she described the struggle of balancing expenses as exhausting.
“I’ve always had to be careful with every penny. The cost of living has surged to unprecedented levels, and it’s been a constant battle,” Tracey said. “Sometimes, as a mum, you feel like you’re failing, but it’s just the situation we’re in.”
Broader Benefit and Pension Updates
Universal credit’s child element will rise starting May, automatically benefitting eligible parents without requiring additional applications. Simultaneously, the basic allowance for the benefit will see an average increase of £120 for about three million families. However, the health element—reserved for those with disabilities—will be reduced by half, impacting only new claimants while protecting existing recipients.
State Pension and Tax Policy Shifts
The state pension is also increasing by 4.8%, aligning with average wage growth due to the triple-lock mechanism. This ensures that those with 35 years of qualifying contributions receive a full pension. Over the next two years, the state pension age will gradually rise from 66 to 67.
Alongside these changes, tax policies are being adjusted. Income tax thresholds remain frozen through 2031, a decision initially made by the Conservatives and later extended by Labour. This move generates extra revenue for public services but has drawn criticism as a “stealth tax” from economists, as it raises taxes without altering rates.
Additional Financial Measures
Other adjustments include revised rules for inheritance tax on farms, dividend taxation, venture capital trust relief, and homeworking allowances. The BBC has developed a tool to estimate how wage growth might affect individuals in England, Wales, and Northern Ireland. Scotland, however, maintains distinct tax bands, and self-employed workers are taxed under separate guidelines.